AAR CORP (AIR) Stock Fundamental Analysis
NYSE:AIR - New York Stock Exchange, Inc. - US0003611052 - Common Stock - Currency: USD
AIR gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 65 industry peers in the Aerospace & Defense industry. While AIR is still in line with the averages on profitability rating, there are concerns on its financial health. AIR has a decent growth rate and is not valued too expensively.
1. Profitability
1.1 Basic Checks
AIR had positive earnings in the past year.
In the past year AIR had a positive cash flow from operations.
Each year in the past 5 years AIR has been profitable.
Of the past 5 years AIR 4 years had a positive operating cash flow.
1.2 Ratios
AIR has a worse Return On Assets (0.35%) than 60.00% of its industry peers.
AIR has a Return On Equity (0.85%) which is comparable to the rest of the industry.
Looking at the Return On Invested Capital, with a value of 3.43%, AIR is doing worse than 61.54% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for AIR is in line with the industry average of 7.95%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.35% | ||
| ROE | 0.85% | ||
| ROIC | 3.43% |
ROA(3y)3.83%
ROA(5y)2.8%
ROE(3y)6.5%
ROE(5y)4.72%
ROIC(3y)6.1%
ROIC(5y)5.14%
1.3 Margins
AIR's Profit Margin of 0.39% is on the low side compared to the rest of the industry. AIR is outperformed by 60.00% of its industry peers.
AIR's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 3.98%, AIR is in line with its industry, outperforming 43.08% of the companies in the same industry.
In the last couple of years the Operating Margin of AIR has grown nicely.
Looking at the Gross Margin, with a value of 18.80%, AIR is doing worse than 67.69% of the companies in the same industry.
In the last couple of years the Gross Margin of AIR has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 3.98% | ||
| PM (TTM) | 0.39% | ||
| GM | 18.8% |
OM growth 3Y2.59%
OM growth 5Y3.1%
PM growth 3Y-2.68%
PM growth 5Y41.67%
GM growth 3Y4.53%
GM growth 5Y3.5%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), AIR is destroying value.
The number of shares outstanding for AIR has been increased compared to 1 year ago.
AIR has more shares outstanding than it did 5 years ago.
AIR has a worse debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 2.71 indicates that AIR is not a great score, but indicates only limited risk for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 2.71, AIR is in line with its industry, outperforming 46.15% of the companies in the same industry.
The Debt to FCF ratio of AIR is 52.48, which is on the high side as it means it would take AIR, 52.48 years of fcf income to pay off all of its debts.
AIR has a Debt to FCF ratio (52.48) which is in line with its industry peers.
AIR has a Debt/Equity ratio of 0.84. This is a neutral value indicating AIR is somewhat dependend on debt financing.
The Debt to Equity ratio of AIR (0.84) is worse than 69.23% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.84 | ||
| Debt/FCF | 52.48 | ||
| Altman-Z | 2.71 |
ROIC/WACC0.38
WACC9%
2.3 Liquidity
AIR has a Current Ratio of 2.68. This indicates that AIR is financially healthy and has no problem in meeting its short term obligations.
AIR has a Current ratio of 2.68. This is in the better half of the industry: AIR outperforms 64.62% of its industry peers.
AIR has a Quick Ratio of 1.27. This is a normal value and indicates that AIR is financially healthy and should not expect problems in meeting its short term obligations.
AIR has a Quick ratio of 1.27. This is comparable to the rest of the industry: AIR outperforms 44.62% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 2.68 | ||
| Quick Ratio | 1.27 |
3. Growth
3.1 Past
AIR shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 9.78%, which is quite good.
The Earnings Per Share has been growing slightly by 5.34% on average over the past years.
Looking at the last year, AIR shows a quite strong growth in Revenue. The Revenue has grown by 18.53% in the last year.
AIR shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 2.48% yearly.
EPS 1Y (TTM)9.78%
EPS 3Y35.99%
EPS 5Y5.34%
EPS Q2Q%11.11%
Revenue 1Y (TTM)18.53%
Revenue growth 3Y11.96%
Revenue growth 5Y2.48%
Sales Q2Q%25.8%
3.2 Future
The Earnings Per Share is expected to grow by 16.14% on average over the next years. This is quite good.
Based on estimates for the next years, AIR will show a small growth in Revenue. The Revenue will grow by 3.31% on average per year.
EPS Next Y14.14%
EPS Next 2Y18.32%
EPS Next 3Y16.14%
EPS Next 5YN/A
Revenue Next Year18.94%
Revenue Next 2Y12.53%
Revenue Next 3Y8.98%
Revenue Next 5Y3.31%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 18.54, the valuation of AIR can be described as rather expensive.
Compared to the rest of the industry, the Price/Earnings ratio of AIR indicates a rather cheap valuation: AIR is cheaper than 84.62% of the companies listed in the same industry.
When comparing the Price/Earnings ratio of AIR to the average of the S&P500 Index (29.35), we can say AIR is valued slightly cheaper.
With a Price/Forward Earnings ratio of 13.88, AIR is valued correctly.
Based on the Price/Forward Earnings ratio, AIR is valued cheaply inside the industry as 95.38% of the companies are valued more expensively.
AIR's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 22.10.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.54 | ||
| Fwd PE | 13.88 |
4.2 Price Multiples
AIR's Enterprise Value to EBITDA ratio is in line with the industry average.
AIR's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 123.24 | ||
| EV/EBITDA | 20.88 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
AIR's earnings are expected to grow with 16.14% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.31
PEG (5Y)3.47
EPS Next 2Y18.32%
EPS Next 3Y16.14%
5. Dividend
5.1 Amount
No dividends for AIR!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
64.52
+0.43 (+0.67%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCapital Goods
GICS IndustryAerospace & Defense
Earnings (Last)
Earnings (Next)
Inst Owners98.47%
Inst Owner Change3.48%
Ins Owners2.44%
Ins Owner Change-1.84%
Market Cap2.32B
Analysts82
Price Target82.11 (27.26%)
Short Float %1.83%
Short Ratio2.67
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Yearly Dividend0.05
Dividend Growth(5Y)-28.92%
DP0%
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)4.23%
Min EPS beat(2)2.63%
Max EPS beat(2)5.83%
EPS beat(4)4
Avg EPS beat(4)2.96%
Min EPS beat(4)0.67%
Max EPS beat(4)5.83%
EPS beat(8)8
Avg EPS beat(8)4.14%
EPS beat(12)12
Avg EPS beat(12)4.38%
EPS beat(16)14
Avg EPS beat(16)5.17%
Revenue beat(2)2
Avg Revenue beat(2)2.67%
Min Revenue beat(2)1.49%
Max Revenue beat(2)3.84%
Revenue beat(4)2
Avg Revenue beat(4)0.65%
Min Revenue beat(4)-1.39%
Max Revenue beat(4)3.84%
Revenue beat(8)5
Avg Revenue beat(8)1.93%
Revenue beat(12)8
Avg Revenue beat(12)1.69%
Revenue beat(16)10
Avg Revenue beat(16)1.23%
PT rev (1m)0%
PT rev (3m)1.05%
EPS NQ rev (1m)-2.03%
EPS NQ rev (3m)0.84%
EPS NY rev (1m)0%
EPS NY rev (3m)2.85%
Revenue NQ rev (1m)0.18%
Revenue NQ rev (3m)2.82%
Revenue NY rev (1m)0.32%
Revenue NY rev (3m)2.39%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.54 | ||
| Fwd PE | 13.88 | ||
| P/S | 0.9 | ||
| P/FCF | 123.24 | ||
| P/OCF | 47.97 | ||
| P/B | 1.96 | ||
| P/tB | 5.64 | ||
| EV/EBITDA | 20.88 |
EPS(TTM)3.48
EY5.39%
EPS(NY)4.65
Fwd EY7.2%
FCF(TTM)0.52
FCFY0.81%
OCF(TTM)1.35
OCFY2.08%
SpS71.61
BVpS32.9
TBVpS11.45
PEG (NY)1.31
PEG (5Y)3.47
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.35% | ||
| ROE | 0.85% | ||
| ROCE | 4.47% | ||
| ROIC | 3.43% | ||
| ROICexc | 3.53% | ||
| ROICexgc | 5.39% | ||
| OM | 3.98% | ||
| PM (TTM) | 0.39% | ||
| GM | 18.8% | ||
| FCFM | 0.73% |
ROA(3y)3.83%
ROA(5y)2.8%
ROE(3y)6.5%
ROE(5y)4.72%
ROIC(3y)6.1%
ROIC(5y)5.14%
ROICexc(3y)6.37%
ROICexc(5y)5.48%
ROICexgc(3y)7.98%
ROICexgc(5y)6.63%
ROCE(3y)7.94%
ROCE(5y)6.7%
ROICexcg growth 3Y2.94%
ROICexcg growth 5Y-1.6%
ROICexc growth 3Y-7.69%
ROICexc growth 5Y-7.54%
OM growth 3Y2.59%
OM growth 5Y3.1%
PM growth 3Y-2.68%
PM growth 5Y41.67%
GM growth 3Y4.53%
GM growth 5Y3.5%
F-Score4
Asset Turnover0.9
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.84 | ||
| Debt/FCF | 52.48 | ||
| Debt/EBITDA | 6.35 | ||
| Cap/Depr | 55.77% | ||
| Cap/Sales | 1.15% | ||
| Interest Coverage | 1.74 | ||
| Cash Conversion | 31.1% | ||
| Profit Quality | 188% | ||
| Current Ratio | 2.68 | ||
| Quick Ratio | 1.27 | ||
| Altman-Z | 2.71 |
F-Score4
WACC9%
ROIC/WACC0.38
Cap/Depr(3y)76.7%
Cap/Depr(5y)63.04%
Cap/Sales(3y)1.24%
Cap/Sales(5y)1.11%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)9.78%
EPS 3Y35.99%
EPS 5Y5.34%
EPS Q2Q%11.11%
EPS Next Y14.14%
EPS Next 2Y18.32%
EPS Next 3Y16.14%
EPS Next 5YN/A
Revenue 1Y (TTM)18.53%
Revenue growth 3Y11.96%
Revenue growth 5Y2.48%
Sales Q2Q%25.8%
Revenue Next Year18.94%
Revenue Next 2Y12.53%
Revenue Next 3Y8.98%
Revenue Next 5Y3.31%
EBIT growth 1Y-31.78%
EBIT growth 3Y14.86%
EBIT growth 5Y5.65%
EBIT Next Year63.82%
EBIT Next 3Y25.93%
EBIT Next 5YN/A
FCF growth 1Y354.05%
FCF growth 3Y-47.1%
FCF growth 5Y-22.59%
OCF growth 1Y189.22%
OCF growth 3Y-25.44%
OCF growth 5Y-8.34%